- Construction Project Dispute Avoidance: An Ounce of Prevention is Worth a Pound of Cure
- July 22, 2013 | Authors: John P. Giffune; A. Robert Ruesch
- Law Firm: Verrill Dana LLP - Portland Office
The construction process is inherently risky. Project owners, contractors and designers grapple with the risk of non-payment, accidents, unanticipated conditions and other unforeseen circumstances. To deal with and mitigate these risks, parties draft and negotiate elaborate contracts, purchase insurance coverage and procurement payment and performance bonds. These risk allocation and mitigation methods seek to either pass the risk on to someone compensated to accept the risk (insurers and sureties) or to one who is in the best position to manage the risk.
Construction project participants frequently accept that disputes are part and parcel to construction projects, but parties spend little time thinking about what kinds of disputes might arise and how they can be resolved quickly. Disputes are risks that can have a direct effect on the success of a project no less than an unforeseen subsurface condition. And like those risks, the risk of disputes can be managed with proper planning, communication and attention to detail.
Below are four (4) keys to successfully avoiding disputes or, where they arise, resolving them before they can threaten the success of a project. These steps require no specialized training or legal knowledge. You need to only bring to the table your discretion and good judgment.
- Do not avoid a budding dispute. Dispute avoidance is not the same as ignoring a dispute. As soon as it becomes clear that there is a disagreement, confront the problem head on. Obviously, some issues are not worth fighting over so be sure before you act that the issue at hand is truly important. If you conclude that it is, communicate early and often. No one likes to receive bad news, but bad news given when it is too late to fix the problem is infinitely worse.
- Document communications. Following up a conversation with an e-mail is an easy way to both make a record of what was discussed, but also remind the participants what they agreed to do and when. The simple existence of the written document means that the parties are more likely to follow through on their commitments. In addition, taking this simple step will help set everyone’s expectations which is key number three.
- Set realistic expectations. Whatever business we are engaged in, we make commitments every day that set others’ expectations. Setting expectations unrealistically high can be disastrous when we are unable to achieve what was promised. Disappointed expectations, even unreasonable expectations, invariably lead to disputes. Simply making clear what can be realistically achieved and providing regular information updating or revising the original projection will prevent many such disagreements.
- Be willing to compromise. We began by noting that not all issues are worth fighting over. It is also true that things change during the course of a construction project or during the life of a dispute. An issue that was crucial at one stage might prove to be less important later on. Be open-minded about giving a little here and there. All human relations require “give and take” and the crucible of a construction project is no exception. Cutting your adversary some slack will allow him or her to return the favor later on. The relationship cannot help but be improved as a result.
Sometimes, despite your best efforts, you will find yourself in a real dispute that you cannot avoid without the formal dispute resolution provisions in your contract. You will know when that time has come. In that case, you and your attorney will be in a better position for having followed steps one through four above.